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tv   Nightly Business Report  PBS  October 26, 2013 1:00am-1:31am PDT

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'. this is "nightly business report" with tyler mathisen and susie gharib brought to you in part by. >> thestreet.com. interactive financial multimedia tools for an ever changing financial world. our dividend stock advisor guides and helps generate income during a period of low interest rates. we are thestreet.com. finding value, the s&p at a record, the dow close to one and the nasdaq closing in on 4,000 but with the indexes at lofty levels, can you find value in this market? proceed with caution, could all this optimism derail the bull run? we have five things market watchers say investors should watch. the oil and gas boom in north dakota and texas isn't just benefitting the heartland. it's also creating jobs in phil mile at a shipyard.
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that and more tonight on "nightly business report" for friday, october 25th. good evening everyone. i'm susie gharib, tyler is off tonight. more positive momentum on wall stet today. the s&p 500 closed at a another record high, and the pmajor stok averages were higher for the third consecutive week. two tech companies were the talk of the trading day. amazon surged 10% and shares is of microsoft shot up 6%. investors brought up the stocks reacting to quarterly results that came out late that we told you about. here is a look at the closing numbers, the dow rose 61 the nasdaq rose 14 and the s&p tacked on seven closing at that new record 1,759. so with the s&p at a new record and the nasdaq closing in on 4,000, it may be getting tougher to find some real value in the stock market. but as seema mody found, there
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may still be some value plays out there. >> reporter: it's getting tougher and tougher finding value in this market, but there are a couple of what experts say are deep value plays, beaten down names that are still pumping out earnings. first up, joy global, mining and equipment maker with shares down about 9% this year, analysts say it trading at an attractive evaluation compares to peers in the industrial sector and the global economy is expected to result in more depend for invest yell names. in the retail space, american eagle down 25% in the past three months. they have been cautious due to the high environment and low store traffic. that's what hurt earnings in q 2. add to that, a colder and wetter spring resulting in less demand for summer wear, although, analysts say the teen retailer could benefit from the upcoming holiday shopping season. switch to tech, ibm, yes, a
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tough couple quarters for big. >> you, that's result in a beaten downstair price but they are cheering the dividend yield of 2% and its plans to continue to find new growth opportunities. within tech, it's a battle between slow growing tech names that yield steady earning great and new age internet names. skeptics say these high flying internet names like facebook and google are trading at a rich valuation and might be too expensive. the bulls say if you want growth, this is where to invest. >> in 1999 investing saying here in 2013 a good place to make money in cash flow protect sieve is what we refer to as new tech. >> reporter: whether industrial, retails or tech, if the market continues to move higher x perts say it will be even more difficult to find deep value plays. for "nightly business report",
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i'm seema mody. he's chief market strategist with russell investments. nice to have you with us. are you finding stocks are getting too expensive? >> in the u.s. market we're seeing a fair valuation on the market. pe, how much can you buy in earnings for what you pay for stocks. it doesn't look overly expensive or cheap, either. from our prospeerspective f we confine ourselves to the u.s. market, i think we're seeing an environment where stock picking, selection will become more important. valuations are important whether growth or value. stocks right now don't look overly rich but we think it will become more of a stock pickers game and picking companies with great earnings and in this environment that can dry revenue. it will be far more important. >> did you agree with seema new
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tech is the place to find deals? >> it's a part of it and we look at a multi asset strategy, not only within tech, energy, health care, the broad array but also looking globally. so we want to understand our valuations more attractive in europe and the united states, for example. so look at emerging markets, europe and where can the really strong balance sheets, revenue drivers be have for evaluation discounts. we'll look in equity space and globally. >> you sound upbeat and positive and i know there is a lot of positive feelings out there in the market. aren't you a little nervous when you see the russell 2,000 hit a new record high during the day, s&p at a new record, google getting above $1,000. doesn't this make you a little bit more cautious? >> we're always looking at what are the risks and opportunities in the market. we talk about this stuff every day, every week, all month long,
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all year long. for us, this is nothing new. when stocks pull back we have a similar conversation. the russell 2,000 small cap stocks are right at an all-time high. the russell 1,000, which is large cap is at an all time high as of today. but within that space, again, we don't see an over or stretched valuation, we just want to know what are the names that have better and stronger balance sheets because if you look at the earnings environment, you're right around market averages. but when markets tend to do well, people tend to bring up concerns. we would also look at europe, emerging markets, commodity space, infrastructure, take a multi asset approach. >> let me ask you this, it doesn't take much, as you know, to trip up this market. we need one negative economic report out of china or something like that. how should investors protect themselves as we have rallies? would you recommend sell into the rally? take into the profit? >> they need to take an active
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managed strategy. rebalancing, looking where valuations are richer. this strategy, not one versus the other but how do you combine them? i think if you look at what can trip us up, political risks, which we've been seeing a lot of, that can be an opportunity and we'll look at what happens in washington. that would be an opportunity. milita milita military intervention and the federal reserve will keep interest rates low and that will be a natural windal underneath equities. we understand there will be volatility but into 2014, globally diversified strategies make sense. >> sounds good. thank you so much v. a great weekend. great market strategist with russell investments. despite the raise, some experts say they are seeing warning signs the markets may be a little over heated, so is it
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time to adjust your portfolios and take some money off the table, or keep risking it, betting stocks will go higher? >> dominic chu takes a look. >> reporter: they are showing signs of worry and are looking at things, first market sentiment. according to data from the american association of investors, investors are not only the most optimistic in ten months, also the least pessimistic in months. if investors are too bullish, that could be a bad sign. second, is the stock market too richly value snd many say now but the s&p 500 currently trades at 16.5 times earnings, in other words, you'll pay $16.50 in stock price for every dollar a company makes. that's higher than average. third, momentum is slowing down. stocks that rocketed higher like tesla and netflix are losing steam. fourth, some stocks are reaching
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record highs and surpassing $1,000 a share think google and price line.com. that could be a warning sign. and fifth, margin debt is at a record high. in other words, investors are borrowing record amounts of money to buy stocks. biron ween says to stay alert. >> you don't have an enormously over priced market. you have a market vulnerable to a correction at any time. a fair amount of speculation in the market. >> reporter: on the other hand, some think the bull run continues. >> although there are warning signs, we think 2014 will allow to expand and earnings pick up and revenue pick up and will push the market higher. >> reporter: it not to say anyone really knows where the market is headed, but some experts are moving ahead with caution. for nightly business report, i'm dominic, chu. positive results from united parcel service.
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they beat estimates by a penny and reported revenue that matched forecast. growth in online retailing and a boost in european exports helped ups deliver solid results. shares rose more than 1% to 9 $5. -- 95.61. p and g posted profits in line with estimates and revenues slightly above expectations. the maker of tide and pampers also reconfirmed its positive forecast for this year. but signs of growth didn't help lift the stock, shares were down a fraction to $80 a share. sherwin williams posted a ri rise helped by strong sales. they benefitted from a housing rebound and a rise in raw material costs. investors brushed off that aspect sending the stock up more than 4% to $195 and change. and a jump in sales helped cale way golf beat earnings and
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boost the outlook. the ceo said the golf equipment maker and better weather led to more golf rounds being played. sales surged 20% to 8.70 still. still ahead on the program, remember the mortgage backed security, the bond, there is a new one being offered backed by rental homes but will this one be different? jp morgan reaching a 5 billion-dollar settlement with the financing agency and claims it misled pfannie mae and fredde
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mac. a broader deal with the justice department is still being negotiated. well, it pays for an airline to take off on time. united airlines just received the largest fine ever by the federal government for leaving passengers stranded on the tarmac. they fined united more than $1 million for keeping passengers aboard 13 flights during thunderstorms at chicago's o'hare airport in july of last year. federal rules say planes carrying more than 30 passengers are prohibited from keeping them on the tarmac more for than three hours without offering them the chance to get off the plane. a cap on claims the nasdaq exchange will have to pay off for the botched initial public stock offering of facebook shares last year. its $41.6 million, the figure calculate by wall street's watchdog the finance regulatory committee. it's less than the 62 million they set aside to repay for lost
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money. so, you've heard of mortgage backed securities, and they role in the housing market collapse. now there is something called rental backed securities. they are bonds backed by single family rental homes. this investment vehicle may hit the market next week. diana olick has details. >> reporter: when housing came crashing down and millions of americans lost homes, large scale investors crept in and bought thousands of foreclosures not to flip but rehab and rent. they are still hungry for more, but need more cash. >> we're looking at this asset class clearly it's been a good investment for these large companies that put equity stake and they are looking to gain exchange, this leverage for another or take up brand-new leverage. >> reporter: sitting on a portfolio of close to 40,000 homes, black stone the largest player in this game will offer
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bonds backed by its homes. it's just like a mortgage backed security but instead of revenue from monthly mortgage payments, it comes from rent. 500 million dollar worth of these bonds will be offered as early as next week according to sources. jp morgan and more wilml market the bonds. potential investors are already asking a lot of questions. >> we want to look at the operations. this is a -- again, its a new asset class and so we want to make sure that the sponsor that has, you know, invested the equity is going to be able to check rent, rerent these properties in a fairly short time period and be efficient about operations. >> reporter: investors want to know how committed the sponsors are to this asset class. will they sell the homes to other investors or hold on for the long haul and where are these homes? are they in good local markets with good economies and good
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jobs? in other words, will the tenants be able to keep paying rent? >> i believe they have done well but i think it's a little -- it takes a little more develop the coming. >> reporter: with investors pouring $20 billion into single family rentals in the past few years, there is no doubt wall street will look to cash in. the hope is they will also look back at the last run on a clifr new investment product and learn from their many mistakes. for "nightly business report", i'm diana olick in washington. >> for more on the potential risks and rewards backed by single family rental homes, head to nbr.com. our market monitor tonight says now is not the time to pile large sums of new money into stocks. chief investment officer at matrix asset advisors. david, you sound pretty cautious, do you buy into what dominic was saying about the warning signs out there in the markets. >> we don't think they are warning signs per se.
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we've been bullish and upbeat. with stocks up 25% we don't think now is the time to get renewed optimism and double down bets. the best guess is it will be a good fourth quarter. we're upbeat about next year but if you look to put new money to work, we could put it to work during sell offs when the market is getting spooked by something. like a 4, 5% sale off we would buy and not chase rallies. >> you have a couple stocks you're recommends, you're the ones you buy when the market dips down a bit. let's start with capital one financial. why do you like this one? >> well, the stock we'll talk about generally haven't done as well as the overall market. we're comfortable. capital one under performed the financial group and credit card group in terms of stock performance but the business is doing much, much better. credit trends are better at under 10 times earnings made a
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renewed comment to return dollars to shareholders through buybacks, through a higher dividend. we think they will be focused and its one of the cheapest credit card and financials out there inr
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samsung. the white house promised toda today. >> the vast majority of consumers will successfully enroll, the health care dot glove the system will operate as it should. it's quality software services. government workers applied for and got jobless benefits during the 16-day federal shutdown. the labor department says since congress approved back pay for
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furloughed employees, that means they were not unemployed and individual state haves to get them to return any unemployment checks they receive. oil prices rose today closing at $97.85 a parol and still managed to decline for three straight weeks and with the trend moving lower. jackie deangelis looks at what that means for gas prices and consumer spending. >> reporter: lower energy costs look like a an earlyan holiday gift for consumers. you probably notice gas prices are down a lot. aaa says the national average is $3.31 a gallon, down 13 cents in a month and down from this year's high of $3.74 in february. the question, how low can we go? >> i think at the pump you could see $3.10 and if you remember last year, we were coming out of a summer with supplies tight because there was a lot of refinery problems and sandy into the picture. >> others are targeting 3.15 to
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$3.20 why? it's down almost 11.5% from the 52-week high. longer term, rising u.s. oil production is making us less dependent. >> we are importing about 8 or 9 million barrels a day. we can absorb with production if production gets high enough. so we have plenty of room. we just crowd those people out of market. >> one rule of thumb, every time the price of crude drops a dollar, the price of gas comes down 2.25 cents. not bad but they think u.s. consumers will change spending habits. >> like the old man returning a bowlf soup at the deli. they won't drive more or take more vacations. >> reporter: moss.seem to agree every little bit counts. >> even a little bit makes a big
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difference. >> reporter: as temperatures fall outside, it's looking like it may be cheaper to keep things warm inside. natural gas is down roughly 11% in the last six months, and heating oil has seen a drop of 6% in two months. >> it will be great to do more shopping. >> reporter: not a bad thing with the holiday shopping season about to begin. for "nightly business report", i'm jackie deangelis. and finally tonight, the dramatic rise in production of shell oil and natural gas in the nation's west is now benefitting companies all the way across the country. brian sullivan has the story from the city of brotherly love. >> reporter: the american oil and gas boom is not just benefitting texas and north dakota. it's also bringing big business to philadelphia. really big business. because the men and women of the philadelphia shipyard are building that. the liberty bay, a huge new tanker set for duty transporting oil up and down the west coast
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for subsid yardry of exxon mobile. shipyard manager lays out how big the ship really is. >> the actual oil capacity, 136,000 cubic meters, it would be around 33 million gallons of crude oil and approximately 790,000 barrels of oil were it's a subsid yardry of a nor region come wan knee but home grown. the jones act requires a ship moving goods within america to be built in america and most of the steel comes from american steel meals. like many shipbuildings fell on hard times during the recession but the boom helped them triple employment in the last two years to more than 1,000 workers. >> it's a game changer for our industry. the increase in shell oil production has increased
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dramatically and ships played an increasingly important role to move the oil to refineries along the nation's coast. >> reporter: these jobs will last for awhile. the shipyard is a contract to build six tankers. liberty bay is the first and each ship can cost as much as $200 million and take up to a year to build. so while the actual oil and gas being drill sd thousands of miles away, the impact is being felt much closer to their home. for "nightly business report" in philadelphia, i'm brian sullivan. >> you can read more about shipbuilding in philadelphia and how it's benefitting from the oil and gas boom by heading to our website, nbr.com. that's it for us, nightly business report for tonight. i'm susie gharib. tyler mathisen will be back monday. thanks for watching and have a great weekend. "nightly business report" has been brought to you by. >> thestreet.com, interactive financial multimedia tools for
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an ever changing financial world our dividend stock advisor guides and helps generate income during a period of low interest rates. we are thestreet.com.
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gwen: the key to getting out of a hole? stop digging. health care and spying on one's friends. we'll explain how tonight on "washington week." >> nobody's madder than me about the fact the website isn't working as well as it should, which means it's going to get fixed. gwen: but not soon enough, as the health care rollout stumbles from week to week, republicans smell opportunity. >> the rollout of obamacare is nothing short of a debacle. and the american people are now fearful of their health care. gwen: and democrats begin to worry. >> we're not interested in hearing about glitching. we're interested in moving forward. gwen: but can republicans resolve their own internal fight? >> they fought the good fight but that fight's over so now what are they going to do? >> i think at the end of the day, for conservatives, we lost the battle but we are going to win the war. just loo a

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